Condo insurance (HO-6): where the master policy stops and yours begins

Buying a condo comes with a comforting-sounding phrase: 'the association carries a master insurance policy.' True — and dangerously incomplete. The master policy covers the building and common areas. An HO-6 condo policy covers the gap between where that policy stops and where your ownership begins, and that gap includes your walls' interior, your belongings, your liability, and a special exposure most owners have never heard of: loss assessments. Understanding the handoff is the whole game.

Two policies, one building

The association's master policy comes in flavors that determine how much you personally need to insure. A 'bare walls' master policy covers the structure but nothing inside your unit — not the drywall's interior surface, not fixtures, not flooring. An 'all-in' (or 'walls-in') master policy covers the original fixtures and finishes but usually not your upgrades. The single most important document you'll read as a new condo owner is the association's master policy declarations, because it tells you exactly where your HO-6 has to start.

What your HO-6 actually covers

• Dwelling (building property) coverage: the interior you're responsible for — drywall, flooring, cabinets, built-ins, and any upgrades you or a prior owner made.
• Personal property: your belongings, on a replacement-cost basis if you elect it (do).
• Personal liability: someone injured in your unit, or damage you cause to another unit — the overflowing tub that ruins the ceiling below.
• Loss of use: living costs if a covered event makes your unit uninhabitable.
• Loss assessment coverage: your share of a loss the association bills back to all owners when the master policy falls short.

Sizing the dwelling coverage

The most common HO-6 mistake is guessing the dwelling amount. It isn't your unit's market value and it isn't the building's replacement cost — it's the cost to rebuild everything from the master policy's coverage line inward: interior walls, flooring, kitchen and bath, fixtures, and upgrades. A contractor or your agent can estimate it. Underinsure it and a serious fire leaves you paying out of pocket to restore the interior the master policy never covered.

The bottom line

A condo is two insurance policies wearing a trench coat: the association's for the building, yours for everything inside your walls plus your liability and your share of any assessment. Pull the master policy declarations, learn whether it's bare-walls or all-in, size your HO-6 dwelling coverage to the interior rebuild cost, and raise loss-assessment coverage well above its token default. The comforting phrase 'the building is insured' is true — it just isn't about you.